New Jersey and Federal Legislation and Regulatory Update

For more information about this blog post, please contact Khaled J. KleleRyan M. MageeLabinot Alexander Berlajolli, or Brianna J. Santolli.

New Jersey recently approved several statutes that reinstated the tax exemption for non-profit hospitals, with some caveats, and changed the standard for trauma care. On the federal side, several federal courts enjoined the “most favored nation” payment model rule and The Department of Health and Human Services (“HHS”) issued a notification of enforcement discretion relaxing HIPAA when it comes to arranging for COVID-19 vaccination appointments.

New Jersey Reinstates Tax Exemption

New Jersey also recently adopted A1135, which reinstates the prior property tax exemptions for nonprofit hospitals with on‑site for‑profit medical providers, except that any portion of the property that is leased to a profit-making organization, or otherwise used for purposes which are not themselves exempt from taxation, is subject to taxation. The bill also establishes the Nonprofit Hospital Community Service Contribution Study Commission. Hospitals exempt from taxation are still required to pay a community service contribution to the municipality in which it is located.

Revising Trauma Care Standards

A5103 revises the requirements for the provision of care to trauma patients. All emergency medical services providers in New Jersey, as a condition of licensure, would be required to certify that its standards, practices, and protocols are in accordance with the “Guidelines for Field Triage of Injured Patients, Recommendations of the National Expert Panel on Field Triage, 2011; Centers for Disease Control and Prevention, MMWR, January 13, 2012, Vol. 61, No. 1,” or successor guidance. The bill also requires each general acute care hospital in the state to maintain trauma patient transfer criteria and transfer agreements.

Licensure of Certain Cardiac Services

New Jersey recently adopted A1176, which requires the New Jersey Department of Health to license certain qualifying hospitals to provide full service adult diagnostic cardiac catheterization, primary angioplasty, and elective angioplasty services. The licensure qualifications include that the hospital is not already licensed as a cardiac surgery center, among other things.

Federal Court’s Delay Implementation of Most Favored Nation Model Rule

Several federal district courts have intervened to temporarily prevent CMS from implementing the “most favored nation” payment model (“MFN”), which was originally scheduled to begin January 1, 2021. The MFN sought to link drugs costs under Medicare Part B to the lowest price of a non-domestic member country, in an effort to reduce Medicare reimbursement rates to most healthcare facilities and open negotiations to discounts with drug manufacturers. However, the U. S. District Court for the District of Maryland issued a nation-wide temporary restraining order, enjoining CMS’s implementation of the rule. In a related case, just days later, the U.S. District Court for the Northern District of California followed suit. Two more days later, the U.S. District Court for the Southern District of New York also issued its own injunction. The underlying lawsuits allege, among other things, that CMS violated the dictates of the APA rulemaking process, the MFN exceeds statutory authority, and the MFN raises issues of constitutionality.

HHS Issued Rule on Enforcement Discretion Related to COVID-19 Vaccine

HHS issued 86 FR 11139, a notification of enforcement discretion, informing the public that HHS is exercising its discretion in applying the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Health Information Technology for Economic and Clinical Health (HITECH) Act (collectively “HIPAA Rules”). Specifically, as a matter of enforcement discretion, HHS’s Office for Civil Rights will not impose penalties for noncompliance with regulatory requirements under the HIPAA Rules against covered health care providers or their business associates in connection with the good faith use of online or web-based scheduling applications for the scheduling of individual appointments for COVID-19 vaccinations during the COVID-19 nationwide public health emergency. The notification also recommends reasonable safeguards for covered providers to implement to protect the privacy and security of individuals' personal health information.